Oil prices raced on Wednesday to five-month highs hit the previous day as the Organisation of Petroleum Exporting Countries (OPEC) production cuts and United States (U.S.) sanctions on Iran and Venezuela continued to tighten supply, though economic worries increased.
Brent crude futures, the international benchmark for oil prices, were up 77 cents, or 1.1 per cent, at $71.38 per barrel U.S. West Texas Intermediate crude oil futures rose 33 cents, or half a per cent, to $64.31 per barrel.
Oil markets have tightened this year because of U.S. sanctions on oil exporters Iran and Venezuela, as well as supply cuts by OPEC and some non-affiliated producers including Russia, a group known as OPEC.
Supplies from OPEC dropped by half a million barrels a day in March to a four-year low as Saudi Arabia continued to curb production. The monthly output cut totals about half a per cent of global crude demand.
Brent and WTI crude oil futures have risen by more than 30 per cent and 40 per cent respectively since the start of the year.
“The global oil market is clearly moving back towards balance thanks to OPEC+ production cuts,” ING bank said.
The Dutch bank said the reduction was not only down to voluntary supply cuts, which the group started this year to prop up prices, but also involuntary curbs from Venezuela and Iran – which are exempt from the OPEC cut pact – due to U.S. sanctions.